RadioShack CEO resigns over resume controversy
David Edmondson has been under pressure after disappointing quarterly results and admitting that he lied on his resume.
Edmondson, who became RadioShack's CEO last May after being groomed for the spot, admitted last week that he had "clearly" misstated his academic record on his resume and on the company's Web site.
David Edmondson
RadioShack Executive Chairman Leonard Roberts said on a conference call that the company's board of directors decided Monday morning to accept Edmondson's resignation in the hopes that the market could focus again on the company's turnaround plan.
"It's fair to say that it has been a 24-hour job for the last few days to really understand what the facts are," Roberts said. "It has been a very, very painful process for us."
The consumer electronics retailer named Claire Babrowski, most recently its executive vice president and chief operating officer, as president and acting CEO while it launches a search for a permanent replacement.
RadioShack has identified Babrowski as a top internal candidate for the job, but Roberts said other internal candidates may also arise. The company also said it has immediately launched a nationwide search for anyone else who could fill the top spot.
"We're going to take as long as it takes to find the right candidate," said Roberts, who Edmondson had replaced as CEO. Roberts said he was not interested in reassuming the job.
Fort Worth, Texas-based RadioShack, which said last week it would hire a lawyer to investigate the matter surrounding Edmondson, has provided few details on what specific issues prompted its board to accept his resignation.
"The board made this decision when the facts became clear to us," Roberts said, admitting only that "a lot happened" over the past week. In reference to an earlier statement the company made in support of Edmondson, Roberts said, "In retrospect, I wish we didn't make that statement because obviously we didn't know all the facts."
Edmondson originally said he had received a bachelor of science degree, but now says he believes--but cannot document--that he received a ThG diploma, awarded for completing a three-year degree in theology.
When Edmondson's resume was vetted at the time of his first hiring in 1994, RadioShack was not in the practice of verifying academic credentials, Roberts said on Monday. He stressed that the company now makes more stringent background checks.
Edmondson is also due to appear in Fort Worth's Tarrant County District Court in April on charges of driving while intoxicated, according to the Tarrant County district attorney. A company spokeswoman last week said a question raised about that issue was "not appropriate."
Edmondson's severance package could be worth $1.5 million, Roberts estimated, with the cash portion of the package valued at less than $1 million. Roberts said the payout will be considerably less than the severance terms RadioShack had agreed upon when Edmondson signed on as CEO. Details on the payout will be filed with the Securities and Exchange Commission on Tuesday, he said.
RadioShack said it would not continue the outside investigation related to Edmondson's resume.
"When our company's credibility becomes based on a single individual...it's time for a change," Roberts said. "It allows RadioShack the opportunity to move forward with this turnaround plan."
RadioShack announced plans last week to close 400 to 700 company-operated stores and liquidate slow-moving inventory. It estimated it could incur costs of $55 million to $100 million on inventory write-downs and store closures this year, though some costs may bleed into 2007.
RadioShack said last week that fourth-quarter earnings had fallen 62 percent after a switch in wireless providers led to an inventory write-down. The news sent the company's shares to an almost three-year low.